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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (11463)	12/3/1997 7:40:00 PM
From: Maverick	Read Replies (1) \| Respond to of 45548

3Com slows in quarter BY DAVID L. WILSON Mercury News Staff Writer Santa Clara's 3Com Corp. on Tuesday said it would report revenue and profits well below Wall Street estimates for the second quarter, as it attempts to deal with slower growth in sales and an unexpectedly high level of unsold modems and other networking equipment. Analysts had expected the company to report profits of more than 40 cents a share for the quarter on Dec. 18 -- but 3Com instead said it will post only a ''slight profit.'' In addition, where analysts had expected 3Com sales to be around the $1.6 billion reported for the first quarter, the company said they'll be between $1.22 billion and $1.24 billion. The company said its inventory swelled to unhealthy levels in part because the market for high-speed 56K modems isn't growing as fast as anticipated. Executives attributed that mainly to the lack so far of any official standard for the high-speed modems, and said buyers are apparently waiting to see which of the two types of modems, those sold by companies such as 3Com and those by others including Rockwell International Corp., will win. In addition, the financial crisis in Asia is slowing regional growth and hurting sales of high technology goods, the company and analysts said. 3Com is best known for a ''networking card'' that plugs into computers and lets them exchange information with other computers, but entered the modem market in a big way with the $8.9 billion purchase of U.S. Robotics, which closed in June. Analysts were largely sanguine about the announcement of lower revenue and profit for the second quarter, which ended Nov. 30. ''I think they've done the right thing by biting the bullet at this time,'' said Martin Pyykkonen, senior analyst with Furman Selz LLC in San Francisco. ''They could have finessed it, but that would have given them slower growth for the next few quarters.'' The company has only recently begun the inventory reduction process, in part because it lacked accurate tools to measure its distributor inventory. Pyykkonen said the steps the company is taking to reduce inventory probably will affect its revenue and profit through a good part of the current third quarter, as well.